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International Contracts in Latin America: History of a Slow Pace Towards the Acceptance of Party Autonomy in Choice of Law* Revista De Derecho Privado, No

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International Contracts in Latin America: History of a Slow Pace Towards the Acceptance of Party Autonomy in Choice of Law* Revista De Derecho Privado, No Revista de Derecho Privado ISSN: 0123-4366 ISSN: 2346-2442 Universidad Externado de Colombia VIAL UNDURRAGA, MARÍA IGNACIA International Contracts in Latin America: History of a Slow Pace towards the Acceptance of Party Autonomy in Choice of Law* Revista de Derecho Privado, no. 38, 2020, January-June, pp. 241-276 Universidad Externado de Colombia DOI: https://doi.org/10.18601/01234366.n38.09 Available in: https://www.redalyc.org/articulo.oa?id=417562528009 How to cite Complete issue Scientific Information System Redalyc More information about this article Network of Scientific Journals from Latin America and the Caribbean, Spain and Journal's webpage in redalyc.org Portugal Project academic non-profit, developed under the open access initiative International Contracts in Latin America: History of a Slow Pace towards the Acceptance of Party Autonomy in Choice of Law* ❱ MARÍA IGNACIA VIAL UNDUrrAGA** ABSTRACT. The right of the parties to choose the law to govern international con- tracts, has been historically denied in Latin America due to the principle of terri- toriality of laws that has imbued national conflict provisions. Several regional and national attempts to authorize party autonomy have been disregarded on the grounds of protecting national sovereignty. Some jurisdictions have recently amended their laws to accept it. This acceptance has not meant a departure from their legal tradi- tion, but an enhancement of the principle of contractual freedom, that has always pervaded their contract rules. KEYWORDS: Choice of Law Clauses, Party Autonomy, Latin American Private Inter- national Law, Territorialism, Contractual Freedom. Contratos internacionales en Latinoamérica: historia de un lento avance hacia la aceptación de la autonomía de la voluntad en la elección de la ley RESUMEN. El derecho de las partes a elegir la ley que gobierna sus contratos interna- cionales ha sido históricamente denegado en Latinoamérica, debido al principio de * Fecha de recepción: 1 de febrero de 2019. Fecha de acceptación: 7 de octubre de 2019. Para citar el artículo: VIAL UNDURRAGA, M. I., “International Contracts in Latin America: An Historical Slow Pace towards the Acceptance of Party Autonomy in Choice of Law”, Revista de Derecho Privado, Universidad Externado de Colombia, n.º 38, enero-julio 2020, 241-276, doi: 10.18601/01234366.n38.09. ** Universidad de los Andes, Santiago de Chile, Chile; Professor. PhD in Laws, King’s College Lon- don, London, United Kingdom. Contacto: [email protected] Orcid: 0000-0003-2312-6143. REVISTA DE DERECHO PRIVADO, ISSN: 0123-4366, E-ISSN: 2346-2442, N.º 38, 2020, 241-276 [242] M ARÍA I GNAC I A V I AL U ND U RRAGA territorialidad de la ley. Varios proyectos regionales y nacionales para autorizar la autonomía de la voluntad han sido desechados argumentando la necesidad de prote- ger la soberanía nacional. Recientemente, algunos países han modificado sus leyes para aceptar esta autonomía. Esta modificación no les ha apartado de su tradición jurídica, sino que ha perfeccionado el principio de libertad contractual, que históri- camente ha inspirado su derecho contractual. PALABRAS CLAVE: cláusulas de elección de la ley, autonomía de la voluntad, derecho internacional privado latinoamericano, territorialismo, libertad contractual. SUMMARY. Introduction. I. The concept and justification of party autonomy. II. The early Latin American domestic conflict rules on contracts and party autonomy. III. The Latin American treaties on contracts and party autonomy. IV. The statutory acceptance of party autonomy in the Latin American domestic conflict rules on con- tracts. Conclusions. References. Introduction The possibility of recognising the validity of choice of law clauses in international contracts, namely, of party autonomy, has been widely discussed in Latin America for more than 130 years. It has, however, only been recently statutorily sanctioned in the domestic conflict rules of some Latin American countries: Peru (1984), Cuba (1987), Mexico (1988), Guatemala (1989), Panama (2014), Argentina (2014), Do- minican Republic (2014) and Paraguay (2015)1. Other Latin American countries ei- ther reject it –this is the case in Brazil and Uruguay2– or, still have no clear rules in respect of it, as happens in Bolivia, Chile, Colombia and Ecuador. This longstanding active or passive resistance towards the acceptance of party autonomy in interna- tional contracts has historical grounds, which merit to be analysed in order to throw light on the possible ways to surmount them. Specifically, this paper intends to analyse the principles that inspire the Latin American conflict rules on contracts in order to assess if they can be reconciled with the acceptance of the principle of party autonomy. It is structured in four sections. The first section provides a definition and brief justification of party autonomy in the conflict of laws. The second and third sections analyse the genesis of Latin American 1 Art. 2095 Peruvian Civil Code (CC) (1984), art. 17 Cuban CC (1987), art. 13 V Mexican CC for the F.D and Federal Matters (1988), art. 31 Guatemalan Decree 2-89, art. 29 Venezuelan Private International Law Act (PILA), art. 77 Panamanian Code of Private International Law (CPIL), art. 58 Dominican Republic PILA, art. 4 Paraguayan Law 5393, art. 2651 Argentinian Civil and Commercial Code. 2 BASEDOW, J., The Law of Open Societies - Private Ordering and Public Regulations in the Conflict of Laws, The Hague, Brill Nijhoff, 2015, 117-120. REVISTA DE DERECHO PRIVADO, ISSN: 0123-4366, E-ISSN: 2346-2442, N.º 38, 2020, 241-276 I NTERNAT I ONAL C ONTRA C TS I N L AT I N A MER ic A [243] conflict rules on contracts and their acceptance of autonomy. And the fourth section, examines the change of paradigm that led to the statutory acceptance of autonomy in some Latin American jurisdictions, in order to advocate for its acceptance in the remaining Latin American jurisdictions. This acceptance of autonomy in all Latin American jurisdictions is urgently needed, since choice of law clauses are commonly included in international contracts connected to these jurisdictions and some national courts vacillate as to upholding them. Nowadays, there is significant juridical uncertainty about the efficacy of these choices in some Latin American countries. Additional techniques are necessary to secure their acceptance by courts; such as the choice of a forum where autonomy is accepted, or the submission of the case to arbitration. The efficacy of these tech- niques are, however, relative since the choice of forum might be challenged and not upheld by courts, or the arbitral award might be denied enforcement in a given Latin American jurisdiction. Thus, the universal acceptance of autonomy in cases submit- ted to judicial adjudication in Latin America would eradicate this uncertainty and help to harmonize conflict rules on contracts with respect to most countries. The acceptance of autonomy is also needed to minimize the legal uncertainty caused by the diversity of conflict rules on contracts between Latin American juris- dictions. Hence, some jurisdictions submit the contract primarily to the law chosen by the parties, others to the law of the place of making of the contract3, others to either the place of performance, or that of making of the contract4 and others to the place of performance determined by irrebuttable presumptions5. This diversity of conflict rules makes it difficult to predict the governing law of contracts connected to these jurisdictions. It also increases legal risks and costs for the parties, since courts might apply to a contract an unforeseen law, or a law whose proof demands specia- lized and costly legal assistance. The consolidation of autonomy would guarantee that the chosen law governs the contract in any of these jurisdictions. It would also harmonize national conflict rules with rules on arbitration, which permit upholding choice of law clauses6. I. The concept and justification of party autonomy Party autonomy in the conflict of laws of contracts is understood to mean the right of the parties to choose the governing law of a contract7. That is, their power to de- 3 Art. 9 Brazilian Introductory Law to the CC. 4 Art. 16 Chilean CC; art. 20 Colombian CC; art 15 Ecuadorian CC. 5 Art. 2399 Uruguayan CC. 6 VIAL, M. I., “Party Autonomy in Latin America: A Pending Task”, in Revista Chilena de Derecho, Pontificia Universidad Católica de Chile, n.° 45-2, 2018, 458-459. 7 SCOLES, E.; HAY, P.; BORCHERS, P. and SYMEONIDES, S., Conflict ofLaws, 4th Ed., St. Paul, Minnesota, Thomson West, 2004, 948; KASSIS, A., Le nouveau droit européen des contrats internationaux, Paris, LGDJ, 1993, 187. REVISTA DE DERECHO PRIVADO, ISSN: 0123-4366, E-ISSN: 2346-2442, N.º 38, 2020, 241-276 [244] M ARÍA I GNAC I A V I AL U ND U RRAGA termine the law that is the causa causans of the contract8; the law that provides the rules to determine the existence, substantive validity and effects of the contract and those rules which the parties cannot displace. Hence, when autonomy is exercised the conflict rule of the forum submits the contract to the chosen law and the parties are bound by this law9. Party autonomy permits the parties to determine the extent and scope of applica- tion of State law to their contracts. It grants them an essential legislative preroga- tive. “It allows private parties to determine the distribution of private law authority themselves, thus essentially, privatising an important allocative function of global governance”10. Party autonomy is justified on several grounds. A philosophical one is that au- tonomy is founded on the principle of the liberty of the individual, which is a human right applicable to both, his personal and economic sphere11. In accordance, the par- ties should be free to enter into a contract and to stipulate the terms and conditions of that contract12. They should be free also to choose the governing law of their contract as they might have valid reasons to do so.
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